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So you haven't read the trust do ents.
That's very ignorant and painfully stupid of you.
http://www.nationalaffairs.com/publi...he-rule-of-lawGeneral Motors, too, had issued secured debt during its years of financial turmoil, but these bonds made up a far smaller fraction of the company's total outstanding debt. And in striking contrast with the Chrysler case, General Motors's bankruptcy plan left the secured creditors intact, paying them the full value of their claims. From the perspective of bankruptcy law and contract rights, this development was encouraging: The Obama administration did not seek to plunder GM's secured creditors as it had Chrysler's. From the perspective of the rule of law, however, this differential treatment might have been even more troubling.
Authored by: Todd Zywicki is the George Mason University Foundation Professor at the George Mason University School of Law and a senior scholar at the Mercatus Center.
lol
So you haven't read the trust do ents.
That's very ignorant and painfully stupid of you.
oh and lol news articles.
Richard Epstein, James Parker Hall Professor of Law, University of ChicagoGM presented somewhat different issues because the only secured creditors were the U.S. and Canadian governments, which ran the transaction. Even the U.S. government cannot shortchange itself, and here it did not look as though anything could ever be left over for unsecured creditors. But even so, there is no explanation as to why this deal favored the UAW unsecured creditors over the unsecured bondholders. The bottom line was another brand of UAW favoritism.
http://www.thefreemanonline.org/feat...s-of-the-game/
lol news article.Treasury's efforts to recoup a possible judgment against the banks could block ex-GM bondholders and other unsecured creditors from seeing a windfall from the lawsuit and could even dilute the recovery they've already received from GM's Chapter 11 case, the creditors said in papers filed Tuesday with the U.S. Bankruptcy Court in Manhattan.
Bondholders are generally not secured creditors.
Do you have some supporting evidence showing in this instance they were?
(they might have been, I don't know, but don't think they were)
(edit)
The author of the paper referenced by Vy, Todd Zywicki, seems to be pretty familiar with the whole affair.
I think Mr. Zywicki's analysis of the legality of the whole process is also pretty much spot on.
Last edited by RandomGuy; 02-23-2012 at 01:24 PM.
http://www.bloomberg.com/news/2011-0...ess-price.html
Investors holding bonds in the old General Motors Corp. will receive stock and warrants for shares in the new General Motors Co. (GM) on April 21, an action that analysts said may depress the stock price.
Old GM, now known as Motors Liquidation Co. (MTLQQ), will give bondholders 150 million shares in GM and warrants to buy 272.8 million more shares. A trust holding the shares will distribute them directly to bondholders’ brokerage accounts on or after April 21, according to a memo distributed Wilmington Trust Inc., a money-management firm hired by the creditors’ committee.
Some of the bondholders are retail investors who may sell the shares and briefly sink GM’s stock price, said David Whiston, an analyst with Chicago-based Morningstar Inc. Investors have probably priced in the dilution, so it won’t change GM’s long-term value, he said. He has not changed his $48 a share valuation based on the release of shares to bondholders.
“I would think that there will be more selling than holding,” Whiston said. “Any sell-off in GM is a buying opportunity. Long term, I think the company is positioned very well.”
Bondholders were promised stock and warrants in the new GM to make up for some of their loss during the predecessor company’s government-backed bankruptcy. The warrants given to bondholders for new GM stock are already in the money, according to a report by Kirk Ludtke, senior vice president of CRT Capital Group, a money management firm in Stamford, Connecticut.
I would note that ins utions that normally hold bonds do so because they are less risky than stocks.
Giving them stocks in return for their bonds would mean that generally means that they would be required by their own investment plans to sell the stocks.
My gut says that this is probably keeping the price of the stock lower than it should be, since this creates a pretty powerful "sell" incentive, relative to demand.
Should have went here first as its straight from the horse's mouth. Thanks for the link.
GM bondholders were not secured. They were not "crushed" in favor of the UAW. In fact, they were compensated as a part of the bankruptcy plan (albeit in stock as opposed to straight cash, and as usual, for pennies on the dollar). And also of note is the fact that the secured creditors received a complete payout on all secured claims. To the extent that any bondholder was "secured" (which is not the case), they would have gotten 100 pennies on the dollar - I wouldn't call that "crushed."
It'd be one thing if 1) they were secured and 2) didn't receive full/any payment as a part of the plan. But that's clearly not the case.
Reconsider? Your take just got crushed.
Interesting bit and well noted.
I would note that UAW, as creditors have a much longer time horizon for the company than your average bondholder, whose interest terminates with the maturation of the bond.As far as I can make out, the main legitimate complaint of the GM bondholders is that they’re getting paid out less than other unsecured creditors (specifically the UAW) with whom they’re pari passu. But I don’t think there’s a legal right anywhere for all pari passu creditors to receive exactly the same treatment. If you owe money on four different credit cards, there’s no law saying you have to pay them all the same proportion of the total amount outstanding.
The UAW, as employees, are part and parcel of the ongoing en y itself.
Political conspiracy theories aside, I imagine they would have more bargaining power than other unsecured creditors in such proceedings, simply because without their ultimate support, there would be no company, as unlikely as they might be to walk away or strike.
That does not strike me as unfair or unethical, were they to get a bit more proportionally than the bondholders, for the simple reason noted above.
That said, union-bashing fits with the Conservative Outrage Machine narrative. The Machine does not care about such things.
Also note the bondholders voted on the deal that put them behind the UAW in compensation.
I'll go ahead and deal with CC's inevitable class warfare rant about the small bondholders who had less of a say what happened to their entire life savings that they put into GM bonds:
Why the would anyone put their entire life savings into GM bonds?
In CC's defense, bondholders in the Chysler reorg did get ed. He might have been thinking about that.
Again, the read that vy posted was very detailed and thorough.
It just keeps getting better and better.....
Attention U.S. taxpayers: You now own a piece of a French car company that is drowning in red ink.
That's right. In a move little noticed outside of the business pages, General Motors last week bought more than $400 million in shares of PSA Peugeot Citroen - a 7 percent stake in the company...Because U.S. taxpayers still own roughly one-quarter of GM, they now own a piece of Peugeot...
http://news.yahoo.com/american-auto-...-abc-news.html
Yeah, sport, saw that this morning. Guess their union over there will be joining ours
over here or vice versa. Wonder when we will bail out their health and pension
fund?
Yes, he's talking about Chrysler, and yes the secured creditors did get screwed, and the UAW got rich. GM is a different cluster- . No small part of which was putting the government in charge of production, and letting them pour taxpayer money into a piece of product, to further a political agenda.
Related:
Fisker Karma car dies in Consumer Reports testing
Whatever Midas had; well, Obama has the opposite.
DETROIT (Reuters) -- A $100,000-plus Fisker Automotive luxury car died during Consumer Reports speed testing for reasons that are still unknown, leaving the struggling electric car startup with another blow to its image.
"It is a little disconcerting that you pay that amount of money for a car and it lasts basically 180 miles before going wrong," David Champion, senior director for the magazine's automotive test center, told Reuters.
...
The breakdown of the Consumer Reports car is more bad news for a company that already recalled some Karmas. Fisker also has changed its CEO and halted production over the past month as it seeks to renegotiate the terms of a $529 million loan from the U.S. Department of Energy.
How exactly is that related to GM? Probably should get its own thread.
Whoops.
Here is the relation.
Government wasn't in charge of production that I am aware of. Source? (probably already been addressed in the thread, I would guess)
The UAW also took some pretty substantial hits in all of this. I don't see how they "got rich". Would you like some source material on the cuts they took to their pensions?
I don't see how losing money makes one "get rich".
got rich keeping their jobs?
A bit of background:
http://en.wikipedia.org/wiki/Advance...g_Loan_ProgramAdvanced Technology Vehicles Manufacturing (ATVM) Loan Program is a $25 billion direct loan program funded by Congress in fall 2008 to provide debt capital to the U.S. automotive industry for the purpose of funding projects that help vehicles manufactured in the U.S. meet higher mileage requirements and lessen U.S. dependence on foreign oil.
USDOE announced in 2009 $8 billion in conditional loan agreements for Ford Motor Company; Nissan North America, Inc.; and Tesla Motors, Inc. to fund the development of advanced vehicle technologies. The loan commitments include a $5.9 billion loan to Ford for upgrading factories in five states to produce 13 more fuel-efficient models, a $1.6 billion loan to Nissan to build advanced electric vehicles and advanced batteries, and a $465 million loan to Tesla Motors to manufacture its new electric sedan. These are the first conditional loans released under DOE's Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, which is using an open, compe ive process to provide about $25 billion in loans to companies that produce cars or vehicle components in the United States. To qualify, companies must propose projects that increase fuel economy to at least 25% above 2005 fuel economy levels.----------------------------------------------The fourth conditional commitment the Department of Energy has entered into under the ATVM Loan program is a $528.7 million loan for Fisker Automotive for the development of two lines of plug-in hybrids by 2016
http://abcnews.go.com/Blotter/car-co...ry?id=14770875With the approval of the Obama administration, an electric car company that received a $529 million federal government loan guarantee is assembling its first line of cars in Finland, saying it could not find a facility in the United States capable of doing the work.
Vice President Joseph Biden heralded the Energy Department's $529 million loan to the start-up electric car company called Fisker as a bright new path to thousands of American manufacturing jobs. But two years after the loan was announced, the company's manufacturing jobs are still limited to the assembly of the flashy electric Fisker Karma sports car in Finland.
They appear to be in the middle of vamping up a former GM plant in Boxwood.
http://www.motorauthority.com/news/1...-boxwood-plant
Here is what the company says about the loans:
http://media.fiskerautomotive.com/gl...g-news-reports
FWIW.
My take is that they are having some problems not entirely unexpected from a start-up car company.
I see some glimmerings of financial problems, so this could quite possibly be another Solyndra, much to Yoni's delight, I'm sure.
http://www.detroitnews.com/article/2...#ixzz2n1mXoVIfThe Obama administration ended the government’s historic nearly five-year intervention in the U.S. autosector Monday. U.S. Treasury Secretary Jack Lew said it had sold its final shares in the Detroit automaker, leaving taxpayers with a $10.5 billion loss on the $49.5 billion bailout.
I say we should tax everyone who was for it more.
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